Tag Archives: u.s. treasury


Protect mortgage credit information from cyber threats

Hardly a day goes by without the revelation of another information security breach leaving thousands of consumers’ private information exposed to hackers and for sale to the highest bidders. Major retailers, financial institutions and educational institutions continue to be favorite targets of cyber criminals. As was seen in the recent breech with mega-retailer Target Corporation, hackers have found it easier to focus on less secure business partners to gain access. In the Target case, the retailer was compromised through a third-party vendor with access to Target systems. It’s also a scary fact that this may be the case with your financial institution as well.

According to the Office of the Comptroller of the Currency (OCC), a division of the U.S. Treasury, the risk of cyber threats is growing and electronic bank fraud is increasing. The OCC reports cyber threats are growing in sophistication and frequency, and require heightened awareness and appropriate resources to identify and mitigate the associated risks. “The costs and resources needed to manage the risks continue to increase; at the same time, the tools and knowledge to conduct the attacks are more readily available. Additionally, institutions’ early adoption of new technology and their growing reliance on third-party providers may expand the overall system’s vulnerabilities to these attacks,” the OCC reports.

What can homebuyers do?

In this environment of increasing risk, what can you as a homebuyer do when purchasing a new home or refinancing to ensure that your private information is well protected? Is all the information the bank or lender asked for protected? What about all of the other people involved in the transaction? After all, loan documents contain every possible piece of sensitive information about you and your spouse. Just imagine if that data fell into the wrong hands.

You can take some comfort that new, recently-adopted federal rules with large penalties for non-compliance and industry best practices are intended to help protect you. However, you would be well-advised to ask whether your providers – lenders, banking partners, etc. – are complaint with these rules because not all are and you need to protect yourself and your data as best as possible.

In 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau (CFPB) and provided authority for the CFPB to supervise financial institutions for compliance with federal consumer financial laws, including existing laws intended to protect your non-public personal information or NPI. Providing real estate settlement services to one of these regulated financial institutions (like your bank or mortgage lender) is deemed to be providing financial products or services under the Act. As a result, the CFPB can bring enforcement actions directly against a real estate settlement services provider (such as your title insurance agent) for a violation of a consumer financial protection law – if they fail to protect your documents and security information.

Title Companies and ‘Best Practices’

In response, the American Land Title Association (ALTA) created a detailed program of industry “best practices” intended to put settlement service providers (title agencies and escrow firms) in compliance with the CFPB regulations. On July 19, 2013, ALTA published its version 2.0 of “Title Insurance and Settlement Company Best Practices,” setting forth industry guidelines for business procedures and service levels. The best practices address seven main areas ranging from internal controls regarding trust accounts to protecting customers’ personal information and responding to complaints. However, Best Practice No. 3 deals specifically with protecting Non-Public Personal Information or NPI. In addition, Best Practice No. 3 includes requirements and procedures for physical security of computers, “clean desk” policies, risk management, disaster recovery, information security practices and methods for the encryption of private data.

For instance, loan and closing documents emailed to you containing NPI must be encrypted. Collectively, these practices are a means for settlement service providers to address the need for increased lender oversight and to ensure necessary safeguards to protect consumers. The implementation of the Best Practices is voluntary but an important means to ensure reduction of risk in the overall financial system and to protect against identity fraud. Banks, including large national institutions like Wells Fargo, have embraced the Best Practices Program.

Under the ALTA Best Practice Program, settlement service providers perform a detailed review and assessment of their operations — typically using an experienced third-party expert. The resulting “Best Practice Certification Package” is then used to certify to consumers, mortgage originators and mortgage servicers that the assessment found the firm to be in compliance with the ALTA Best Practices in all material respects and represent that the firm will remain in compliance for the next two years.

So back to the original question – what can you do to ensure that your mortgage loan data is kept safe and secure? One thing you can do is to ask your title agency about its participation in the ALTA Best Practice program and whether it has undergone a Best Practices Review. If not, you may want to ask for another title agency.

Chuck Matthews is a 30-year veteran of the banking and real estate industries. He is the Chairman and CEO of WGM Associates LLC, a Scottsdale-based information technology and security consultancy.

Economic concepts

Understanding Economic Concepts, Applying In A Global Perspective

Within the past few decades we have become a global economy, which adds great opportunity but also risk. Our global economy is affected by many more factors today and is connected deeply with other countries. How does this affect the United Sates?

It can affect us in many ways. Before analyzing our global economy it’s important to understand the basics of economics and apply them today in a global perspective. Even though, government and other country’s policies differ, it is still important to understand the basic concepts.

Some of the key economic concepts to be familiar with are: supply and demand, fiscal policy, monetary policy, economic indicators, business cycles, inflation, deflation and stagflation.

Supply and demand

In regards to supply and demand, the supply is the amount available of a particular good or service, and the demand is what buyers are willing to pay for that particular good or service.

The price of the good or service is the primary element that can control the supply or demand of the good or service. Typically if a business lowers the price of a good or service the demand will increase. Whereas, by raising the price of a good or service, the demand will decrease.

Fiscal and monetary policy

Fiscal policy is another major influence in our economy. This is when the government, under the direction of congress, influences our economic activity by taxing, borrowing or spending. Monetary policy on the other hand, controlled by the Federal Reserve, can increase or decrease the U.S. money supply. The Federal Reserve has many tools to assist with monetary policy:

1) Reserve requirement for banks
2) Increase or decrease the discount rate
3) Open-Market Operation (the purchase and sale of U.S. Treasury securities)
4) Margin requirements

With these tools the FED can act immediately to tighten credit or encourage it. Many times both fiscal and monetary policy are used together to control inflation in the hopes of having real economic growth.

Economic indicators

Our economic activity can be measured by several factors and by using some leading indicators we can get a better feel on its activity. Some indicators that are important to track are: the average weekly hours of manufacturing production workers, average weekly new claims for unemployment, building permits for new housing, stock prices and our nation’s money supply. These allow us to see trends in our economic activity.

Business cycles

For many years economist have used business cycles to learn about trends in the market place. Typically, they can track expansion and contraction activity. Through research and historical market studies we have been able to provide an estimate on the time frame that our economy is in an expansion period or how long it has been in a contraction period. This may help investors to understand what stage we are at in the business cycle (Peak or Trough).

Inflation, deflation and stagflation

Next is understanding how our economy may react to an inflationary, deflationary or stagflation period. Each of these is very different and will cause our government, consumers and investors to treat their money differently.

During an inflationary period, we will experience a general increase of prices. This process will decrease the purchasing power of our U.S. dollar, hence, will slow spending. Whereas, in a deflationary period we will experience the opposite and see a decrease in the general level of prices. Usually consumers will spend more during these times. Stagnation is another concern and occurs when the production of a good has become stagnant and the price continues to rise. This can be very dangerous and cause an economic recession or even a depression. All of these must be in balance. If they get out of hand they can cause major shifts in our economy.

Having a general understanding of economic concepts can help investors learn about why our economy shifts and some of the important factors that need to be considered when investing in our evolving global economy.

For more information about the economic concepts discussed in this column, visit jacobgold.com.

Securities and investment advisory services offered through ING Financial Partners, Inc. Member SIPC. Jacob Gold & Associates, Inc. is not a subsidiary of nor controlled by ING Financial Partners, Inc.This information was prepared by Michael Cochell of Jacob Gold & Associates, Inc. and is for educational information only. The opinions/views expressed within are that of Michael Cochell of Jacob Gold & Associates Inc. and do not necessarily reflect those of ING Financial Partners or its representatives. In addition, they are not intended to provide specific advice or recommendations for any individual. Neither ING Financial Partners nor its representatives provide tax or legal advice. You should consult with your financial professional, attorney, accountant or tax advisor regarding your individual situation prior to making any investment decisions.